Twila Van Leer

Planning Key To Painless Yule Shopping

November 29, 2012 By Twila Van Leer

christmas-shopping — Budgeting Plans For Christmas

If you’re ho-ho-hoping to make it to 2013 with your finances intact, plan to plan. Impulse buying and overuse of credit are the twin bugaboos for some shoppers every Christmas, but there are ways to avoid these gifting traps.

Americans are likely to spend more this Christmas, because with the economic downturn abating, most Americans have more to spend. Matthew Shay, CEO of the Retail Federation estimates that holiday spending will increase by 4.1 percent or more. So if you spent $600 last year and are the average Joe or Jill, it is likely you’ll spend another $25 this year.

The statistics are bearing out Shay’s optimism. Over the past 25 months, there has been a consistent increase in retail sales each month. And some 60 to 65 percent of the American shopping population say they will rely on cash or debit cards this year, a good sign that the temptation to pile on holiday debt is going the way of the Ghost of Christmases Past.

Shay credits a good helping of better financial management to the recovering economy to explain the improvement. “We are using sound money management fundamentals,” he says.

Steve Krenzer, CEO of Pricegrabber.com, agrees that a bit of wisdom in the holiday shopping frenzy can salvage budgets that might otherwise be scuttled. His company compares prices on more than 80 million products and works with 40,000 merchants.

Krenzer says there are indications that shoppers are not always intent on getting the “bottom prices.” They factor in other details such as shipping costs, return policies and guarantees that may counterbalance the price. Shoppers engaging in “couch commerce” look at all of these angles before pressing the final button. More than 90 percent of today’s shoppers research their options before making purchases, he says.

This Christmas, it is apparent at the outset for Pricegrabber, that electronics are taking second place to soft goods — including clothing and other personal items — on many shopping lists.

Mondays and Tuesdays are the most active days for online shipping, Krenzer said, and women, as the “chief household officers” are more likely to be the family shoppers than men. The average age for shoppers is mid-40s.

Amazon.com founder Jeff Bezos works hard at keeping a finger on the retail pulse. That is how the noted e-tailer, which employs more than 80,000 people, keeps at the top of the frugality game. Amazon’s market value has reached $114 billion dollars. He is constantly on the lookout for new products, many of them devised to address consumer complaints.

This year’s Kindle Paperwhite, an e-ink device that includes illumination for the first time, is one of those products. The product, moderately priced at just $119, is nerdily wonderful, allowing the avid reader to peruse his books in bed without disturbing a partner. That’s the kind of consumer consideration that makes Bezos the undisputed heir to the late Apple’s Steve Jobs as the poster boy for entrepreneurship in today’s market.

One of his strategies is to invent new products to push to customers. He encourages development of some of these after listening to consumer complaints. He released this product for sale this year: the Kindle Fire HD 7, selling for $199 plays streaming video and DVDs in true HD, is the most gifted item on Amazon.

Prominent e-tailers such as these are doing their bit to make the holiday shopping more stress-free. Wise consumers will piggy-back on their advice by researching before buying, looking at all the factors before making final decisions, avoiding “panic” buying and becoming aware of what’s really out there. As Santa himself would say, this way, “it’s in the bag.”

Using Checks Is Part Of The Earliest American Traditions

October 22, 2012 By Twila Van Leer

When the first emigrants from England began settling along the eastern seaboard of what would become America, they brought with them some of the banking practices they had enjoyed in their homeland.

Making payments and conducting business with checks had become a firmly established part of European economics by the 18th century. From 1760 to 1800, the number of banks in London, for instance, doubled. Parliament finally gave permission for new corporate banks in the city in 1833, increasing the number of options available to residents, according to a history of check use, compiled by the Federal Reserve Bank of Atlanta.

When the American colonies began flexing their financial muscles, British political leaders began to impose difficult policies on the upstart new country, suppressing banks so that the colonists could use neither checks nor banknotes. The colonies were prohibited from issuing paper money, adding to the grievances that ultimately led to the Revolutionary War. But what followed the successful fight for independence was a hodge-podge of financial schemes developed independently by the individual colonies. The new country wrestled with the notions of central monetary control vs. the rights of the states to conduct their own economic affairs.

The U.S. Constitution was finally accepted by the colonies, denied the individual states the right to issue paper money, but gave them the ability to charter banks. Over the first few decades, the central government created some oversight authority by creating the First Bank of the United States, followed by the Second Bank of the United States. They failed to survive when early presidents saw them as symbols of British-style concentration of moneyed power.

The rapid expansion of the United States, with the frontier constantly moving farther west, created new challenges, particularly for those who wanted to conduct long-distance business. Newly established communities tended to be small and geographically isolated. Collecting on a check was difficult and costly. It was possible to negotiate a check, but no third parties were anxious to buy them because it was so tough to collect. “Documentary bills” became one method of expediting business from one area of the country to another. For instance, a cotton merchant in New Orleans could borrow money or make purchases in the southern city by drawing a documentary bill on his wholesaler in New York. A bill of lading would be attached to a shipment of goods to the north, indicating that the southern merchant had shipped cotton to New York of a value sufficient to cover the amount of the bill.

As some cities grew, their state–chartered banks created cooperative alliances with institutions in other cities, which facilitated the use of checks. Until the Civil War, however, checks functioned only as a local form of payment. Improvements in transportation and communication contributed to easing the difficulties and long-distance check payments gradually grew. Still, complications were rife. In one instance, a check drawn on a bank in Sag Harbor, New York, and received in Hoboken, N. J., changed hands ten times before its collection was finalized. The distance between the two communities was only about 100 miles. A remittance charge or exchange charge was often added to the costs of negotiating a check, to cover the cost incurred by the paying bank, which had to ship currency or coin or use some other means for settling the negotiation. One researcher referred to this era of check use in the United States as a “Haphazard arrangement riddled with inefficiencies.”

The National Banking Acts of 1863, 1864 and 1865 went a long way toward resolving the troublesome issues that surrounded use of checks. They allowed for federally chartered banks and took significant steps toward assuring that banks were fiscally sound by requiring that they hold reserves equal to the deposits they were receiving. The groundwork was laid for a national check clearing system and correspondent networks were created to simplify transfers of funds.

With more safeguards in place and fewer complications in successfully negotiating a check, the United States moved by degrees to its current situation in which check use is not for business only, but for the vast majority of individuals, who write checks with never a thought to how it all came about.

Emergency Savings Tips

June 28, 2012 By Twila Van Leer

Unless you’re sitting in a movie, chances of an overwhelming emergency (think invasion by aliens) are not very likely. But in the natural course of things , emergencies do occur, including earthquakes, hurricanes, floods, blizzards, windstorms, fires and landslides. On a more personal level, the theft of credit or debit cards, checks and other items that you routinely use to make your way financially can be a temporary emergency that deprives you of your usual ability to pay for purchases, cover usual expenses, etc.

Financial experts take the position that emergencies, large or small, are almost certain and they advise that you be prepared to see yourself through a temporary dry spell. The question is, how much to stash for an emergency and where to put it so it is accessible when you need it without being a target for thieves. The “how much” element is tricky. There is no set amount and the individual ability to tuck money away against future need varies greatly. Some say $500 minimum. Others set three to six months of usual income as the goal. Some see a “conservative” $10,000 as requisite. In the final analysis, you have to assess your ability and do what feels right for you. But you must make it a priority not to be taken lightly and then treat your emergency fund as inviolable. Don’t let little emergencies rob you of what you would need in a real emergency. Treat the emergency fund as you do insurance: Be sure it’s available, then hope you never have to draw on it.

Just be aware that in a real emergency, there is likely to be no power (no ATMs, no self-serve gasoline pumps, etc.) and financial institutions are likely to be unavailable. Your credit and debit cards are probably going to be useless. That makes cash the preferred mode of preparing for an emergency.

Financial guru Dave Ramsey advises starting small. Set a goal, for instance, to save $3,000 in a year. That amounts to $250 per month. Spread it over 18 months and the monthly set-aside is $166. Rule of thumb: It probably will be at least a week after a serious emergency before things return to normal for your finances. Plan on at least that long. If you already have savings accounts, consider taking out enough to finance your emergency fund. It is possible to invest the emergency funds, but don’t put them in accounts that can’t be accessed almost immediately. The money should be liquid and available. If for some reason, your emergency fund is depleted (say in an actual “little” emergency such as frozen pipes or some such) rebuild as soon as you can.

While in the normal routines of life it is not wise to keep a large amount of cash in your home, that might be exactly where you need the ready money for an emergency. Be creative in finding unobtrusive, unusual places to stash your cash. Not under the mattress, in a sock in the drawer or any of the other spots that have become so cliched they are obvious. Some suggestions from the experts:

Put cash, ideally in smaller bills such as tens and twenties, inside a plastic baggie, place it in a meat tray and put it in the freezer as unobtrusively as possible among other packages of meats.

Bury it in the yard, inside a piece of PVC pipe or other water-impervious container. (Use good sense. If your yard is covered in six feet of snow in the winter, take another tack.) The same idea would work with a large planter inside your home.

If you want to put an envelope of bills behind a photo or piece of art, insert it between the cardboard backing and the picture, not on the back.

Take a tip from the old movies and put “the evidence” inside a book from which you have carved a hollow section. Of course, that only works if you remember which book you used. In a real emergency, there will be no time for browsing.

Create a “decoy safe,” by putting the cash into a small container and burying it in any larger container that looks like anything but a bank — a mayonnaise jar, tin can, shaving cream tube, etc. etc.

Just remember that accessibility is the key in this instance. If you hide it so thoroughly that it takes hours to retrieve it, you need to reassess. Emergencies don’t, by their nature, provide lots of time to contemplate. The important thing is to recognize the need for an emergency fund, start now to provide one and have it handy if the need arises.

Foreclosed Property A Good Buy? Check Closely Before You Jump

June 4, 2012 By Twila Van Leer

Foreclosures and short sales have been an unhappy downside to the American housing market in recent years. For those looking for a bargain, the temptation to snatch up something at a greatly reduced price makes the time seem ripe. But there are some precautions people in that mode should note carefully.

On the plus side, many distressed properties are selling at 5 percent to 10 percent below today’s market value. That’s as much as 50 percent or more below the peak prices of five to six years ago. Coupled with the current low interest rates, that’s enough to attract buyers with enough assets to take the plunge. But experienced Realtors advise caution. There are some common pitfalls in these deals. Some bargain-hunters have found that their offers on even listed short-sales go unanswered.

Banks make loans. They don’t sell real estate and even though they’ve had several years of dealing with property on which they have foreclosed, they still aren’t good at it, many prospective buyers complain. Weeks, even months of frustration may be ahead for those bent on such a purchase.

For one thing, lending institutions are bogged down with the sheer numbers of properties they have had to reclaim and the backlog can be a frustrating factor for the would-be new owners. It could take up to a year to consummate a deal. You have to be lucky to hit one of the “waves” that occur when the institution has worked through a number of problem loans and is ready to market a batch of properties. These sellers also differ in their approaches to ridding themselves of foreclosed properties. Some are in a hurry to sell and put on a price gauged to get the property sold. Others may pad the price in anticipation of being asked to make concessions.

Before you write out your check, listen to some tips offered by Realtors to help you maneuver the winding path to foreclosed property ownership:

1. Don’t let the posted price be the only criterion on which to base a decision. Consider all the factors to avoid belated sticker shock.

2. If what you want is a condo, check with the homeowners’ association and be certain it has adequate reserves and is certified by the U.S. Federal Housing Administration. Without that certification, would-be buyers relying on FHA-insured loans, would not accept the purchase. Some other types of loans have the same guidelines. Your resale potential could take a real nosedive. Be aware that some condominium complexes charge very high home-owner fees, which should be factored into the long-term cost.

3. Don’t rush into anything. Sometimes that great asking price can be a cover for significant problems with the property. If you lose what you saved on the bottom line through costly repairs, you haven’t benefited at all. Property that has been left to languish without any upkeep might be targeted by its political jurisdiction for fines for weeks, trash , unpaid utility bills, etc.. As the proud new owner, those are part of your deal. Some homeowners facing foreclosure feel free to walk off with anything that isn’t firmly attached.

The lower prices of housing in today’s market compared to what they were at the height may trip you up if you buy a short-sell home and then want to refinance. The lender may refuse because the property at today’s values is less than it was before. There also is the problem of multiple loans on a property. Second and third mortgages can muddy the waters pretty fast.

Banks that went along with the extra mortgages a few years ago are not nearly so eager now. All of the lenders who have a money interest in the property have to agree to a short sale. Best to become involved after all those items are settled.

Unless you are auction-savvy, don’t risk that route. Also be aware that you aren’t the only bargain-hunter in the market. Expect multi-offers situations and be prepared to dicker aggressively.

Some experts in the field are aware that there are bargains to be had, but unless you go into the short-sale/foreclosoure market with your eyes wide open, you may find that your “good buy” really meant good-bye to precious assets.

Arm Yourself Against Fake Check Scams

May 30, 2012 By Twila Van Leer

Fake check scammers never rest. They actively look for ways to victimize people. And too many unsuspecting people fall for it, losing money to their multi-billion-dollar schemes. The only way to avoid becoming one of the victims is to learn to recognize and avoid such scams.

Fake checks look real, often real enough to fool bank personnel. Phony cashier’s checks or those designed to look like they are from real businesses often are actually “dummied up” copies of legitimate checks, created without the knowledge of the companies.

The National Consumers League Internet Fraud Watch offers these suggestions to help you in your effort to stay scam-free:

Beware of any transaction in which you are asked to pay by check with the guarantee that some of the money will be wired back to you. Chances are you’re walking into a scam.

There are many variations on the ploy. Someone may offer to buy something you have advertised for sale. They may offer to pay you to do work at home. They may hold out the promise of an “advance” on a sweepstakes you have purportedly won. They may offer to pay the first installment on promised millions that you’ll receive for allowing a party to transfer money from a foreign country to your bank “for safekeeping.” The pitches are many and they all sound feasible.

Scammers have methods of finding potential victims. They check newspaper and online advertisements for personal listings of items for sale. They look at online job sites to find people seeking employment. They place ads with phone numbers and/or email addresses so people can contact them. They may even send emails or faxes at random, expecting that some recipients will be gullible enough to swallow their bait. Claiming to be in a different country, a scammer may tell you that making a transaction internationally is too complicated. They promise that someone in the United States will send you a check. Don’t believe it.

Or they may try to involve a third party, saying this third person owes them money and they will have that individual pay you for what they have purchased. They dangle the promise that the check from this third person will exceed the sale price of the merchandise. They ask that you deposit this third party check, keep what is owed for the merchandise and wire the balance to them.

If you have agreed to work at home, the scammer may claim you’ll be processing checks from “clients.” They want you to deposit these checks and wire them the money after subtracting your pay. Another twist is for the scammer to “overpay” you “by mistake” and ask that you return the excess. Either way, you have lost. The sweepstakes and foreign money variations often include a request of money for taxes, customs charges, bonding fees or legal costs, which would seem feasible if the transaction were legitimate.

Under federal law, banks must make funds available to you shortly after deposit — one to five days in most instances — so you may be able to draw on fake checks very soon. But if it’s a fake check, the responsibility rests with you, just as if it were bona fide. You most likely will be informed that there is no substance behind the check you deposited and the amount will be subtracted from your balance. The process could take several weeks, but the result is inevitable. The financial institution relies on depositors to determine the risk of what they deposit. If a check is no good and the account does not contain enough to cover it, the institution my take money from your other accounts to make it good, or expect you to make up the difference.

It is not unheard of for law enforcement to bring charges against the victim because there is every appearance that they have defrauded the bank. This is the ultimate double-whammy.

The bottom line, according to the Consumer League’s guidelines, is that there is NEVER a legitimate reason for anyone with whom you are dealing to ask you to wire money back to them. If you are selling something or providing a service for someone you do not know, insist on a cashier’s check for the exact amount involved, preferably from a local bank or one that has a branch in your area.
Do not deposit a check if you believe it is fake. Report it to NCL’s Fraud Center, www.fraud.org. The information will be forwarded to the appropriate law enforcement agency.